Private markets

Private market investing refers to investing in companies, assets, or strategies that are not publicly traded on stock exchanges like the NYSE or Nasdaq. These investments are part of the broader category of alternative investments.

Private markets are a growing part of the economy, and investors of all sizes are increasingly recognizing that they can offer a potential source of wealth creation that complements public investing.

To learn more about private market investing, read our Introduction to Private Markets guide.

Investors often allocate to private markets to enhance diversification and access opportunities outside traditional public markets.

Private markets may also offer the potential for enhanced returns by providing access to long-term growth opportunities, privately held companies, and investments that are not typically available through public equities or bonds.

The primary private markets asset classes include private equity, private credit, infrastructure, and private real estate.

Financial advisors typically implement private markets as a complement to traditional stock and bond allocations rather than as a full replacement.

When incorporating private markets, advisors consider factors such as a client’s investment objectives, income or growth needs, risk tolerance, time horizon, and liquidity needs. Advisors may start with core allocations to private equity and private credit, then expand into areas such as infrastructure or private real estate depending on the client’s goals and overall portfolio construction.

Investors can access private market investments through a variety of professionally managed investment vehicles, including private funds, interval funds, non-traded REITs, and business development companies (BDCs).

Investment structures, liquidity terms, and eligibility requirements can vary depending on the strategy. Investors may choose to work with a financial advisor to determine which approach best fits their portfolio objectives.

Private market investments involve risks that differ from traditional public market investments. These risks may include limited liquidity or investments being illiquid, less frequent valuation updates, longer investment horizons, and sensitivity to market or economic conditions. To learn more about risks associated with private market investing, read our Introduction to Private Markets guide.